Vehicle launches can be critical for major automakers for many reasons. Tesla's Model S was a great example of an incredibly unique electric vehicle that helped a young automaker carve out a valuable market niche. Ford's 2015 F-150 was a successful attempt to make its highest-volume, and most profitable, product more fuel efficient to help meet looming CAFE standards.
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If important launches go awry, it can be an expensive mistake to fix, and if they go correctly, it can help a brand expand its sales instantly. With that said, here are three important vehicle launches investors should keep their eyes on. They include launches from Volkswagen Group (NASDAQOTH: VLKAY), General Motors (NYSE: GM), and Tesla Motors (NASDAQ: TSLA).
The little electric car that could -- and will
John Rosevear: It won't sell in huge numbers, and it probably won't generate a whole lot of profit. But the launch of General Motors' 2017 Chevrolet Bolt EV, set to happen in a matter of weeks, is still critically important -- not just for GM, but for the "legacy" auto business as a whole.
The Bolt is a pure battery-electric car (no gasoline, ever) that has a range of 238 miles and a price of just under $30,000 after U.S. government incentives. It's the first-ever electric car to combine over 200 miles of real-world range with a mass-market price.
And it didn't come from Silicon Valley. That's a big part of what makes it significant.
The 2017 Chevrolet Bolt EV will begin arriving at U.S. dealers by the end of 2016. Image source: General Motors.
Sure, fans of Tesla Motors' sleek rides have mocked the Bolt for its homely, utilitarian looks. But they miss the point: The fact that the Bolt exists, and that it will be in mass production in a matter of weeks, shows the world that GM has the technology. GM won't be left behind as the world moves to electric cars.
(In fact, you'll note that the Bolt is about to beat Tesla's much-hyped "affordable" Model 3 to market by at least six months, maybe longer. Who's disrupting whom?)
The Bolt isn't sleek because "sleek" would go against its purpose. It's an urban runabout designed with ride-hailing and car-sharing duties in mind. Its short and stubby shape makes it easy to park and maneuver, and its boxy styling allows for a roomy back seat that can comfortably hold adults as well as a generous cargo area. (And despite its looks, the Bolt is surprisingly quick and a lot of fun to drive.)
Nobody with any understanding of the auto business doubts that GM could, if it wanted to, use the Bolt's technology to build a drop-dead gorgeous, fast, futuristic Tesla rival. In fact, GM, with its vast scale and century-plus of manufacturing experience, could probably build such a car for a price well below the cost of Tesla's offerings (and without the quality problems that have plagued Tesla's offerings to date).
I'll be surprised if GM doesn't unveil something like that in the near future. But if and when it does, remember: The Bolt came first, and that makes it a big deal.
Can the Atlas revive VW in America?
Daniel Miller: If you're looking for a critical launch, look no further than Volkswagen Group'sAtlas for a number of reasons. First, let's look at what the Atlas is, and then why it's so important at this moment in time for the German automaker.
Volkswagen's Atlas SUV. Image source: Volkswagen Group.
VW's Atlas is a large SUV literally designed from the ground up with the U.S. consumer in mind. The Atlas is big compared to most of its SUVs but similar in size to Ford's Explorer, which also puts it head to head with other well-known SUVs such as Honda's Pilot and Toyota's Highlander. VW plans to offer the SUV in five trim levels, competitively priced for the U.S. market, with two engine options: a 2.0 liter TSI turbo four-cylinder generating 238 horsepower and a more powerful 3.6 liter V6 churning out 280 horsepower.
That's what the Atlas is, but let's give some context for why it's so important. Volkswagen is still reeling from its scathing diesel emissions scandal that has cost the company billions in repairs and fines and tarnished its brand image across the globe. Further, Volkswagen is a top automaker in terms of sales in both Europe and China, two of the three largest auto markets in the world, but it has never been more than a niche player in the world's most profitable market: America.
If Volkswagen wants to deliver a growth story to investors, it has to significantly grow sales in the U.S. market. And at a time when its brand image is burning to the ground and its diesel vehicle sales are plunging, the Atlas can be the first step in its potential turnaround story.
It's going to be tough, even with Americans' renewed love affair with SUVs, because Volkswagen will have to find a way to convince consumers it's more than just a diesel passenger car brand. Volkswagen is putting its money where its mouth is, though, and investing $900 million to expand its Chattanooga assembly plant for a second line to produce the crossover at a time when U.S. sales are plateauing.
Last year, Volkswagen brand vehicles failed to break 350,000 units sold in the U.S., a small fraction of major automakers, and it's on pace for another 13% decline this year. IHS Automotive projects the Atlas' sales to reach 52,000 for 2018, which would not only move the needle, but could help set the stage for management to design and offer more SUVs in its portfolio.
Volkswagen needs a new vehicle to win consumers back, plain and simple, and it needs a growth story in the U.S. market to bring investors back. The Atlas will be critical if Volkswagen wants to try to start solving those two issues.
An electric car backed by big production plans
Tesla Motors' Model 3. Image source: Tesla Motors.
Daniel Sparks: Tesla's Model 3 launch, which is planned for late 2017, has the potential to make a strong case for fully electric vehicles' mainstream potential. While essentially every major automotive company has already started giving more weight to the nascent segment by announcing new, more compelling models slated to launch over the coming years (withGeneral Motors' all-electric Chevrolet Bolt coming before the end of this year), Tesla is making preparations for its Model 3 to sell in volumes that would dwarf electric vehicle sales today.
Earlier this year, Tesla announced it was moving its target for achieving an annualized build rate of 500,000 electric vehicles two years earlier, from 2020 to 2018.Higher-than-expected demand for its Model 3prompted the company to essentially double down on its production targets for total vehicle sales.
While achieving sales close to 500,000 units would still only represent just a fraction of global annualized auto sales of about 90 million units,the figure would be high enough to make a tangible case for a larger market for battery-powered vehicles.
Some may find Tesla's 2018 target difficult to believe. However, with Tesla's vehicle sales growthincreasing at more rapid rates the bigger the company gets, and following the company's recent achievement of a 100,000-unit annualized build rate (up from an annualized build rate of just over 50,000 units just several quarters ago), the ambitious target is looking more realistic.
Of course, even if Tesla falls short of its 2018 production target, the success of the company's Model S and Model X -- and robust demand already displayed for Model 3 -- suggest the vehicle is at least set to make a dent.
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Daniel Miller owns shares of Ford and General Motors. Daniel Sparks owns shares of Tesla Motors. John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford and Tesla Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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